CMC Motors Group has started laying off employees after losing key car dealership deals, in an exercise that will affect 169 of its staff.
A wholly owned subsidiary of Dubai-based multinational Al-Futtaim Group, the company has lost the dealerships on the anchor Ford franchise in Kenya to Salvador Caetano, which will start dealing in the American brand from July.
The company has also lost Suzuki to CFAO motors (formerly Toyota Kenya), which will handle the brand from next month.
Mazda is expected to announce the new distributor in the coming months, after ending its deal with CMC.
The move has hard-hit the firm which has for decades been an authorised distributor of new passenger vehicles, tractors and major automobile brands in Kenya.
“As a result of the termination of these distributorship contracts coupled with the changes in the market demand, CMC Group is re-organising its business. This will result in a reduction in the number of roles and resources required to execute the remaining functions,” Group managing director Sakib Eltaff said in a notice.
Employees to be affected cut across senior management, administration, finance, IT, legal, logistics, procurement among others.
The company intends to undertake the redundancy in three phases as the distributors wind up their operations with CMC Group, between this month and December.
Phase one of the redundancy commenced yesterday, (April 25).
Management has committed to comply with the employment Act during the process, individual contracts and the Collective Bargaining Agreement between the company and the union.
CMC had earlier lost the Jaguar, Land Rover and Volkswagen franchises to Inchcape Kenya (the successor of RMA Kenya) and DT Dobie respectively, with the latest development dealing a final blow to its mass-market passenger vehicle business.
It has blamed the developments to a decline in demand in the passenger vehicle business due to poor economic condition, slow growth in the new vehicle sector and a dwindling number of customers and competition from dealer groups.
The company now says it will invest and refocus growth efforts towards the agriculture mechanisation as well as the two-wheeler sectors.
